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Will any bank view my deals income instead of mine?

Discussion in 'Property Finance' started by Melbpositivegeared, 29th Feb, 2016.

  1. Melbpositivegeared

    Melbpositivegeared Well-Known Member

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    I'm looking at a purchase where I'll have 20% equity in the deal. The property is a set of units (strata titled) with a 9% yield. The rents clearly cover all expenses and then some.

    I moved jobs and do not have the serviceability to make this work. Will any lender be able to view the deal's income instead of mine?

    Commercial finance could have been an option - However with only 20% equity I don't think I'd be able to get it.
     
  2. Blacky

    Blacky Well-Known Member

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    Most banks would include the increased rents recieved as additional income.

    There is of coarse a fair bit of risk to you, if you cant service the finance without the rental income. What will a few weeks of vacancy to do you?

    Also what is the 'equity'. Is it genuine savings or increased property values? If the latter, are you sure you are not over-extending yourself?

    Just remember - "the deal of a life time comes around every day"

    Blacky
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    No.
     
  4. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    The income from the units are considered as part of the serviceability test. It may cover the cost of the loan (as assessed by the bank), but that's not all the expenses that need to be covered.

    The income also needs to cover your cost of living and any other liabilities you may have. A 9% yield won't do that in today's environment.

    Additionally many lenders won't recognise a 9% yield on the purchase price and reduce it to something they feel is more 'normal', such as 6%.
     
    Jake Milne likes this.
  5. JameZ

    JameZ Active Member

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    ANZ will consider your new employment after 3 months provided you've passed probation.
     
  6. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    As determined by ?

    ta
    rolf
     
  7. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Lenders take into account the rental income - but be careful here as some lenders will cap the yield to circa 6%

    Who advised on servicing? If it's one lender - seek a second opinion via a decent broker.

    Cheers

    Jamie
     
  8. Melbpositivegeared

    Melbpositivegeared Well-Known Member

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    The fact that I maxed out my serviceability and just moved jobs getting a $40k base salary pay cut.

    However... There are massive commissions in this role and as of next month I will be seeing my income sit a lot higher than it was previously- what are your thoughts on commissions and how long banks want to wait before they recognise them?
     
  9. Melbpositivegeared

    Melbpositivegeared Well-Known Member

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    Thanks Jamie,
    Having just changed jobs for less money I know I don't currently qualify for lending. However im keen to hear your thought on how much time before the banks will look at a rather steady record of commissions? I always thought it was a minimum of a year (still on a base salary, but making 2/3 of my income via Comms)
     
  10. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Anz wil look at 90 days for Comms case by case

    Ta

    Rolf
     
  11. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Once you've got at least 3 months commissions behind you, there's quite a few lenders that will be willing to use this. It's not entirely straight forward and the longer history you've got the better.
     
  12. TaylorChang

    TaylorChang Well-Known Member

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    What you can do is to partner up with someone has higher income to go into the purchase with you. For example, ask your family member who has good income to purchase the property with you.
     
  13. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Good idea.

    Or better yet be part of a company or trust.